It’s basic economics – when the economy contracts and the flow of money slows, so do tax receipts to local governments, barring maneuvering by the government to impose higher taxes. And that has been a focus of news stories, most notably the state budget woes that have recently hit California.
A June 22 “CBS Evening News” segment showed how, during this sluggish economy, the demand for state government social programs, like welfare, have increased across the county, even as cash-strapped states are in fiscal crisis. But the report didn’t point to one of the biggest reasons for state deficits: irresponsible government growth.
“For the first time in 15 years, welfare numbers are up in at least 26 states,” CBS correspondent Cynthia Bowers said. “In
But the same economic conditions that place more people in need of assistance have also hit state coffers, Bowers explained.
“The demand for social services is increasing at a time when states just don’t have the money to meet the need,” Bowers said. “Around the country, state revenues are falling by more than 6 percent and that could add up to more than $180 billion in shortfalls over the next three years.”
This point was reiterated by Raymond Scheppach, head of the National Governors Association, who has been actively championing tax hikes in these beleaguered states.
“We’ve been keeping statistics for over 30 years and this is by far the worst situation that we’ve even seen,” Scheppach said.
On a state-by-state basis, it has caused governments to call for a variety of actions, including tax hikes, cuts in some government services, cuts from the government’s payroll and even the possibility of having to sell state assets.
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But what Bowers didn’t explain is the $12-billion gap in
One of the other states in Bowers’ report,
